Oil prices down in Asian trade

SINGAPORE: Oil prices fell in Asia on Thursday as dealers fretted over a lower-than-expected drop in US crude production that dimmed hopes of a quick end to a global supply glut, analysts said.

US benchmark West Texas Intermediate for June delivery fell 35 cents to $60.58 while Brent crude for June eased 36 cents to $67.41 in afternoon trade.

Daniel Ang, investment analyst at Phillip Futures in Singapore, said dealers were focusing on data in the Department of Energy’s latest stockpiles report showing US
crude-oil production only slipped marginally, to 9.4 million barrels per day.

“Prices have come off because markets had been anticipating that US production numbers would have come down lower,” Ang told Agence France-Presse.

Traders have been hoping a steady decline in US production could pave the way for an easing of a global supply glut that has depressed prices since last year.

Ang said oil prices had climbed to close at fresh 2015 peaks on Wednesday as an initial reaction to the stockpiles report, which showed US crude reserves tumbled by 3.9 million barrels in the week to May 1, the first decline in 16 weeks.

Analysts had expected an increase of 1.5 million barrels, according to a Bloomberg News poll.

Despite the decline, at 487.0 million barrels of crude, the stockpiles were at their highest level on record for this time of year.

“That initial bullishness over the stockpiles decline has worn off this morning,” Ang said.

Weak US economic data released Wednesday was also weighing on oil prices, Ang said.

Non-farm productivity fell 1.9 percent in the first quarter year-on-year. It was the second straight quarterly fall.

Payroll firm ADP meanwhile reported the US added just 169,000 private-sector jobs in April, the second month in a row under 200,000, as the oil sector downturn continued to pinch the labor market.

Sanjeev Gupta, head of the Asia-Pacific oil and gas practice at business consultancy firm EY, said “the short-term price outlook awaits the US weekly rig count to be released on Friday for a further gauge on supply levels.”